Contract

Link

Embed

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER SAID
ACT.

CONVERTIBLE
PROMISSORY NOTE

U.S.
$400,000.00

August
14, 2008

FOR VALUE RECEIVED, Quest Minerals
& Mining Corp., a Utah corporation (the “Maker”), hereby promises to
pay to Professional Offshore Opportunity Fund, Ltd., or its successors and
assigns (the “Payee”),
at its address at 1400 Old Country Road, Suite 206, Westbury, New York, 11590,
or to such other address as Payee shall provide in writing to the Maker for such
purpose, a principal sum of Four Hundred Thousand Dollars (U.S.
$400,000.00). The aggregate principal amount outstanding under this
Note will be conclusively evidenced by the schedule annexed as Exhibit B hereto
(the “Loan Schedule”),
up to a maximum principal document of U.S $400,000. The entire
principal amount hereunder shall be due and payable in full on August 14, 2010
(the “Maturity Date”),
or on such earlier date as such principal amount may earlier become due and
payable pursuant to the terms hereof.

1. Interest
Rate. Interest shall accrue on the unpaid principal amount of
this Secured Convertible Promissory Note (the “Note”) at the rate of eight
percent (8%) per annum from the date of the first making of the loan for such
principal amount until such unpaid principal amount is paid in full or earlier
converted into shares (the “Shares”) of the Maker’s common
stock, $0.001 par value (the “Common Stock”) in accordance
with the terms hereof. Interest hereunder shall be paid on the
Maturity Date or on such earlier date as the principal amount under this Note
becomes due and payable or is converted in accordance with the terms hereof and
shall be computed on the basis of a 360-day year for the actual number of days
elapsed.

2. Conversion of Principal and
Interest. Subject to the terms and conditions hereof, the
Payee, at its sole option, may deliver to the Maker a notice in the form
attached hereto as Exhibit A (a “Conversion Notice”) and an
updated Loan Schedule, at any time and from time to time after the date hereof
and prior to the payment of the principal amount and all accrued interest
thereon (the date of the delivery of a Conversion Notice (except as otherwise
set forth in the last sentence of this paragraph, a “Conversion Date”), to convert
all or any portion of the outstanding principal amount of this Note plus accrued
and unpaid interest thereon, for a number of Shares equal to the quotient
obtained by dividing the dollar amount of such outstanding principal amount of
this Note plus the accrued and unpaid interest thereon being converted by the
Conversion Price (as defined in Section 15). Conversions hereunder
shall have the effect of lowering the outstanding principal amount of this Note
plus all accrued and unpaid interest thereunder in an amount equal to the
applicable conversion, which shall be evidenced by entries set forth in the
Conversion Notice and the Loan Schedule.

-1-

3. Certain Conversion
Limitations.

(a) The
Payee may not convert an outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would result in the
Payee, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act (as defined in Section 15)
and the rules promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock. Since the Payee will not be
obligated to report to the Maker the number of shares of Common Stock it may
hold at the time of a conversion hereunder, unless the conversion at issue would
result in the issuance of Shares in excess of 4.999% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Payee or an affiliate thereof, the Payee shall have
the authority and obligation to determine whether and the extent to which the
restriction contained in this Section will limit any particular conversion
hereunder. The provisions of this Section may be waived by Payee upon
not less than 61 days’ prior notice to the Maker.

(b) The
Payee may not convert an outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would result in the
Payee, together with any affiliate thereof, beneficially owning (as determined
in accordance with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock. Since the Payee will not be obligated to report to the
Maker the number of shares of Common Stock it may hold at the time of a
conversion hereunder, unless the conversion at issue would result in the
issuance of Shares in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Payee or an affiliate thereof, the Payee shall have the authority and obligation
to determine whether and the extent to which the restriction contained in this
Section will limit any particular conversion hereunder. The
provisions of this Section may be waived by Payee upon not less than 61 days’
prior notice to the Maker.

(c) The
Payee may not convert an outstanding principal amount of this Note or accrued
and unpaid interest thereon to the extent such conversion would require the
Maker to issue shares of Common Stock in excess of the Maker’s then sufficient
authorized and unissued shares of Common Stock.

4. Deliveries.

(a) Not
later than three (3) Trading Days (as defined in Section 15) after any
Conversion Date (the “Delivery
Date”), the Maker will deliver to the Payee (i) a certificate or
certificates representing the number of Shares being acquired upon the
conversion of the principal amount of this Note and any interest accrued
thereunder being converted pursuant to the Conversion Notice (subject to the
limitations set forth in Section 3 hereof), and (ii) an endorsement by the Maker
of the Loan Schedule acknowledging the remaining outstanding principal amount of
this Note plus all accrued and unpaid interest thereon not converted (an “Endorsement”). The
Maker’s delivery to the Payee of stocks certificates in accordance clause (i)
above shall be Maker’s conclusive endorsement of the remaining outstanding
principal amount of this Note plus all accrued and unpaid interest thereon not
converted as set forth in the Loan Schedule.

-2-

(b) If
the Maker fails to deliver to the Payee such certificate or certificates
pursuant to Section 4(a) by the third (3rd) Trading Day after the Conversion
Date, the Maker shall pay to the Payee, in cash, as liquidated damages and not
as a penalty, $500 for each Trading Day after such third (3rd)
Trading Day until such certificates are delivered. Nothing herein
shall limit a Payee’s right to pursue actual damages or declare a Triggering
Event (as defined in Section 7) pursuant to Section 7 herein for the Maker’s
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Payee shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the Payee
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law. Further, if the Maker shall not have delivered any
cash due in respect of conversions of the principal amount of this Note and any
interest accrued thereunder by the third (3rd)
Trading Day after the Conversion Date, then in lieu of the receipt of such cash
payment, the Payee may, by notice to the Maker, require the Maker to issue
shares of Common Stock pursuant to Section 2, except that for such purpose the
Conversion Price applicable thereto shall be the lesser of the Conversion Price
on the Conversion Date and the Conversion Price on the date of the Payee
demand.

(c) If,
by the relevant Delivery Date Maker fails for any reason to deliver the Shares
to be issued upon conversion of this Note and after such Delivery Date,
Payee (a “Converting
Payee”) purchases, in an arm’s-length open market transaction or
otherwise, shares of Common Stock (the “Covering Shares”) in order to
make delivery in satisfaction of a sale of Common Stock by the Converting Payee
(the “Sold Shares”),
which delivery such Converting Payee anticipated to make using the Shares to be
issued upon such conversion (a “Buy-In”), the Converting Payee
shall have the right, to require Maker to pay to the Converting Payee, in
addition to and not in lieu of the amounts due under Section 4(b) hereof (but in
addition to all other amounts contemplated in other provisions of the
Transaction Agreements, and not in lieu of any such other amounts), the Buy-In
Adjustment Amount (as defined below). The “Buy-In Adjustment Amount” is
the amount equal to the excess, if any, of (x) the Converting Payee’s total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (y) the net proceeds (after brokerage commissions, if any) received
by the Converting Payee from the sale of the Sold Shares. The
Company shall pay the Buy-In Adjustment Amount to the Company in immediately
available funds immediately upon demand by the Converting Payee. By way of
illustration and not in limitation of the foregoing, if the Converting Payee
purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which Company will be required to pay to the Converting Payee will be
$1,000.

5. Optional Redemption of
Principal Amount. Provided a Triggering Event or an event
which with the passage of time or the giving of notice could become Triggering
Event has not occurred, whether or not such Triggering Event has been cured, the
Maker will have the option of prepaying the outstanding principal amount of this
Note (“Optional
Redemption”), in whole or in part, by paying to the Payee a sum of money
equal to one hundred and twenty percent (120%) of the principal amount to be
redeemed, together with accrued but unpaid interest thereon and any and all
other sums due, accrued or payable to Payee arising under this Note through the
Redemption Payment Date as defined below (the “Redemption
Amount”). Maker’s election to exercise its right to prepay
must be by notice in writing (“Notice of
Redemption”). The Notice of Redemption shall specify the date
for such Optional Redemption (the “Redemption Payment Date”),
which date shall be twenty (20) days after the date of the Notice of Redemption
(the “Redemption
Period”). A Notice of Redemption shall not be effective with
respect to any portion of the principal amount for which the Payee has a pending
election to convert; provided, however, that Payee
may not initiate any additional conversions during the Redemption
Period. On the Redemption Payment Date, the Redemption Amount, less
any portion of the Redemption Amount against which Payee has exercised its
conversion rights prior to the Notice
of Redemption, shall be paid in good funds to Payee. In the event Maker fails to
pay the Redemption Amount on the Redemption Payment Date as set forth herein,
then such Notice of Redemption will be null and void.

-3-

6. Certain
Adjustments.

(a) In
case of any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, the Payee shall have the right thereafter to, at its option,
(A) convert the then outstanding principal amount, together with all accrued but
unpaid interest and any other amounts then owing under this Note only into the
shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of the Common Stock following such reclassification
or share exchange, and the Payee shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common Stock
into which the then outstanding principal amount, together with all accrued but
unpaid interest and any other amounts then owing hereunder in respect of this
Note could have been converted immediately prior to such reclassification or
share exchange would have been entitled or (B) require the Maker to prepay the
aggregate of its outstanding principal amount under this Note, plus all interest
accrued and other amounts due and payable thereon, at a price determined and
payable in accordance with Section 7. The entire prepayment price
shall be paid in cash. This provision shall similarly apply to
successive reclassifications or share exchanges.

(b) No
adjustments in the Conversion Price shall be required if such adjustment is less
than $0.01, provided that any adjustments which by reason of this Section are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 7 shall be
made to the nearest cent or to the nearest 1/100th of a
share, as the case may be.

(c) Whenever
the Conversion Price is adjusted pursuant to any of Section 6, the Maker shall
promptly mail to the Payee a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiting such
adjustment.

-4-

(d) If
(A) the Maker shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Maker shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the Maker shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; (D) the approval of
any stockholders of the Maker shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Maker is a party, any sale or transfer of all or substantially all of the assets
of the Maker, or any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; (E) the Maker shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Maker; then, in each case, the Maker shall cause to be filed at
each office or agency maintained for the purpose of conversion of the any
portion of the principal amount and interest outstanding under this Note, and
shall cause to be mailed to the Payee at its last address as it shall appear
upon the stock books of the Maker, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, however, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.

(e) In
case of any (1) merger or consolidation of the Maker with or into another Person
that would constitute a Change of Control Transaction (as defined in Section
15), or (2) sale, directly or indirectly, by the Maker of more than one-half of
the assets of the Maker (on an as valued basis) in one or a series of related
transactions, or (3) tender or other offer or exchange (whether by the Maker or
another Person) pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, stock, cash or property of
the Maker or another Person: then the Payee shall have the right to (A) convert
the then aggregate amount of principal and interest outstanding under this Note
into the shares of stock and other securities, cash, and property receivable
upon or deemed to be held by holders of Common Stock following such merger,
consolidation or sale, and the Payee shall be entitled upon such event or series
of related events to receive such amount of securities, cash and property as the
shares of Common Stock into which such aggregate amount of principal and
interest outstanding under this Note could have been converted immediately prior
to such merger, consolidation or sale would have been entitled, (B) in the case
of a merger or consolidation, (x) require the surviving entity to issue shares
of convertible convertible debt with aggregate principal amount equal to the
then aggregate amount of principal outstanding under this Note, plus all accrued
and unpaid interest and other amounts owing thereon, which convertible debt
shall have terms identical (including with respect to conversion) to the terms
of this Note and shall be entitled to all of the rights and privileges of the
Payee as set forth herein and the agreements pursuant to which this Note was
issued (including, without limitation, as such rights relate to the acquisition,
transferability, registration and listing of such shares of stock other
securities issuable upon conversion thereof), and (y) simultaneously with the
issuance of such convertible debt, shall have the right to convert such debt
only into shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such merger or
consolidation, or (C) in the event of an exchange or tender offer or other
transaction contemplated by clause (3) of this Section, tender or exchange the
then outstanding aggregate amount of principal and interest under this Note for
such securities, stock, cash and other property receivable upon or deemed to be
held by holders of Common Stock that have tendered or exchanged their shares of
Common Stock following such tender or exchange, and the Payee shall be entitled
upon such exchange or tender to receive such amount of securities, cash and
property as the shares of Common Stock into which the then outstanding aggregate
amount of principal and interest under this Note could have been converted
(taking into account all then accrued and unpaid dividends) immediately prior to
such tender or exchange. The terms of any such merger, sale,
consolidation, tender or exchange shall include such terms so as to continue to
give the Payee the right to receive the securities, cash and property set forth
in this Section upon any conversion or redemption following such
event. This provision shall similarly apply to successive such
events.

-5-

(f) The
Maker covenants that it will reserve and keep available out of its authorized
and unissued shares of Common Stock solely for the purpose of issuance upon
conversion of the outstanding aggregate amount of principal and interest under
this Note as herein provided, upon the conversion of the outstanding amount of
principal and interest under this Note. The Maker covenants that all
shares of Common Stock that shall be issuable pursuant to the terms thereof
shall, upon issuance, be duly authorized, validly issued and fully paid, and
nonassessable.

(g) Upon
a conversion hereunder the Maker shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may if
otherwise permitted, make a cash payment in respect of any final fraction of a
share based on the Per Share Market Value at such time. If the Maker
elects not, or is unable, to make such a cash payment, the Payee shall be
entitled to receive, in lieu of the final fraction of a share, one whole share
of Common Stock.

(h) The
issuance of certificates for shares of the Common Stock on conversion of the
principal amount and interest outstanding under this Note shall be made without
charge to the Payee for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificate.

7. Mandatory Prepayment Upon
Triggering Events. Upon the occurrence of a Triggering Event (as defined
below), the Payee shall have the right (in addition to all other rights it may
have hereunder under this Note or under applicable law), exercisable at the sole
option of the Payee, to require the Maker to prepay all or a portion of the
outstanding principal amount of this Note plus all accrued and unpaid interest
thereon. Such prepayment shall be due and payable within thirty (30) Trading
Days of the date on which the notice for the payment therefor is provided by the
Payee.

A
“Triggering Event” means any one or more of the following events (whatever the
reason and whether it shall be voluntary or involuntary. or effected by
operation of law or pursuant to any judgment, decree or order of any court. or
any order, rule or regulation of any administrative or governmental
body):

(i) any
default in the payment of the principal of interest on or other payments owing
in respect of this Note, free of any claim of subordination, as and when the
same shall become due and payable (whether on a Conversion Date, the Maturity
Date, by acceleration or otherwise);

(ii) the
Maker shall fail for any reason to deliver certificates or an Endorsement to the
Payee prior to the sixtieth (60th) day
after a Conversion Date pursuant to and in accordance with Section
4(a);

-6-

(iii) the
failure of the Common Stock to be eligible for trading on the OTC Bulletin Board
or listed for trading on a Subsequent Market or the suspension of the Common
Stock from trading on the OTC Bulletin Board or a Subsequent Market, in either
case, for more than thirty (30) consecutive calendar days;

(iv) the
Maker shall be a party to any Change of Control Transaction or shall agree to
sell or dispose of all or in excess of 33% of its assets in one or more
transactions (whether or not such sale would constitute a Change of Control
Transaction), or shall redeem or repurchase more than a de minimis number of
shares of Common Stock or other equity securities of the Maker (other than
redemptions of Shares);

(v) the
Maker or any of its subsidiaries shall commence or there shall be commenced
against the Maker or any such subsidiary a case under any applicable bankruptcy
or insolvency laws as now or hereafter in effect or any successor thereto, or
the Maker commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
the Maker or any subsidiary thereof or there is commenced against the Maker or
any subsidiary thereof any such bankruptcy, insolvency or other proceeding which
remains undismissed for a period of 60 days; or the Maker or any subsidiary
thereof is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Maker or any
subsidiary thereof suffers any appointment of any custodian or the like for it
or any substantial part of its property which continues undischarged or unstayed
for a period of 60 days; or the Maker or any subsidiary thereof shall by any act
or failure to act indicate its consent to, approval of or acquiescence in any of
the foregoing; or any corporate or other action is taken by the Maker or any
subsidiary thereof for the purpose of effecting any of the
foregoing;

(vi) the
Maker shall fail to observe or perform any other covenant, agreement or warranty
contained in, or otherwise commit any breach of (ii) this Note or (ii) the
Purchase Agreement, and such failure or breach shall not, if subject to the
possibility of a cure by the Maker, have been remedied within sixty (60) days
after the date on which notice of such failure or breach shall have been
given;

8. No Waiver of Payee’s Rights,
etc. All payments of principal and interest shall be made
without setoff, deduction or counterclaim. No delay or failure on the
part of the Payee in exercising any of its options, powers or rights, nor any
partial or single exercise of its options, powers or rights shall constitute a
waiver thereof or of any other option, power or right, and no waiver on the part
of the Payee of any of its options, powers or rights shall constitute a waiver
of any other option, power or right. The Maker hereby waives
presentment of payment, protest, and notices or demands in connection with the
delivery, acceptance, performance, default or endorsement of this
Note. Acceptance by the Payee of less than the full amount due and
payable hereunder shall in no way limit the right of the Payee to require full
payment of all sums due and payable hereunder in accordance with the terms
hereof.

9. Modifications. No
term or provision contained herein may be modified, amended or waived except by
written agreement or consent signed by the party to be bound
thereby.

-7-

10. Cumulative Rights and
Remedies; Usury. The rights and remedies of the Payee
expressed herein are cumulative and not exclusive of any rights and remedies
otherwise available. If it shall be found that any interest outstanding
hereunder shall violate applicable laws governing usury, the applicable rate of
interest outstanding hereunder shall be reduced to the maximum permitted rate of
interest under such law.

11. Collection Expenses.
If this obligation is placed in the hands of an attorney for collection after
default, and provided the Payee prevails on the merits in respect to its claim
of default, the Maker shall pay (and shall indemnify and hold harmless the Payee
from and against), all reasonable attorneys’ fees and expenses incurred by the
Payee in pursuing collection of this Note.

12. Successors and
Assigns. This Note shall be binding upon the Maker and its successors and
shall inure to the benefit of the Payee and its successors and
assigns. The term “Payee” as used herein, shall also include any
endorsee, assignee or other holder of this Note.

13. Lost or Stolen Promissory
Note. If this Note is lost, stolen, mutilated or otherwise
destroyed, the Maker shall execute and deliver to the Payee a new promissory
note containing the same terms, and in the same form, as this
Note. In such event, the Maker may require the Payee to deliver to
the Maker an affidavit of lost instrument and customary indemnity in respect
thereof as a condition to the delivery of any such new promissory
note.

14. Governing
Law. This Note shall be governed by and construed and enforced
in accordance with the internal laws of the State of New Jersey without regard
to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the county of Bergen, State of New Jersey, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.

15. Definitions. For
the purposes hereof, the following terms shall have the following
meanings:

“Business Day” means
any day except Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the State of New York or State of Utah are
authorized or required by law or other government action to close.

“Change of Control
Transaction” means the occurrence of any of (i) an acquisition after the
date hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of in excess of 33% of the
voting securities of the Maker, (ii) a replacement of more than one-half of the
members of the Maker’s board of directors which is not approved by those
individuals who are members of the board of directors on the date hereof in one
or a series of related transactions, (iii) the merger of the Maker with or into
another entity, the direct or indirect consolidation or sale of all or
substantially all of the assets of the Maker in one or a series of related
transactions, unless following such transaction, the holders of the Maker’s
securities continue to hold at least 66% of such securities following such
transaction or (iv) the execution by the Maker of an agreement to which the
Maker is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).

-8-

“Conversion Price”
shall be 60% of the average of the five (5) lowest Per Share Market Values
during the ten (10) Trading Days immediately preceding a Conversion
Date

“Exchange Act” means
the Securities Exchange Act of 1934, as amended.

“Per Share Market
Value” means on any particular date (a) the closing bid price per share
of Common Stock on such date on the OTC Bulletin Board or on such Subsequent
Market on which the shares of Common Stock are then listed or quoted, or if
there is no such price on such date, then the closing bid price on the OTC
Bulletin Board or on such Subsequent Market on the date nearest preceding such
date, or (b) if the shares of Common Stock are not then listed or quoted on the
OTC Bulletin Board or a Subsequent Market, the closing bid price for a share of
Common Stock in the over-the-counter market, as reported by the National
Quotation Bureau Incorporated or similar organization or agency succeeding to
its functions of reporting prices) at the close of business on such date, or (c)
if the shares of Common Stock are not then reported by the National Quotation
Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices), then the average of the “Pink Sheet” quotes for
the relevant conversion period, as determined in good faith by the
Payee.

“Person” means a
corporation, an association, a partnership, limited liability company an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

“Purchase Agreement”
means that certain Convertible Note Purchase and Royalty Agreement dated as of
August 14, 2008 by and between Maker and Payee.

“Securities Act” means
the Securities Act of 1933, as amended.

“Subsequent Market”
means the New York Stock Exchange, American Stock Exchange, Nasdaq SmallCap
Market or Nasdaq National Market.

“Trading Day” means
(a) a day on which the shares of Common Stock are traded on such Subsequent
Market on which the shares of Common Stock are then listed or quoted, or (b) if
the shares of Common Stock are not listed on a Subsequent Market, a day on which
the shares of Common Stock are traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (c) if the shares of Common Stock are not
quoted on the OTC Bulletin Board, a day on which the shares of Common Stock are
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices); provided, however, that in the event that the
shares of Common Stock are not listed or quoted as set forth in (a), (b) and (c)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New Jersey or State of Utah are authorized or required by law or other
government action to close.

-9-

IN WITNESS WHEREOF, the Maker has
caused this Convertible Promissory. Note to be duly executed and delivered as of
the date first set forth above.

The undersigned hereby elects to
convert the principal amount and interest indicated below of the attached
Convertible Promissory Note into shares of common stock, $0.001 par value (the
“Common Stock”), of
Quest Minerals & Mining Corp., according to the conditions hereof, as of the
date written below. No fee will be charged to the holder for any
conversion.